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TMI BlogDebenturesX X X X Extracts X X X X X X X X Extracts X X X X ..... Bank or by any other statutory authority to issue debentures for a period exceeding ten years.]] 8 [(b) Such an issue of debentures shall be secured by the creation of a charge on the properties or assets of the company or its subsidiaries or its holding company or its associates companies, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon.] (c) the company shall appoint a debenture trustee before the issue of prospectus or letter of offer for subscription of its debentures and not later than sixty days after the allotment of the debentures, execute a debenture trust deed to protect the interest of the debenture holders ; and (d) the security for the debentures by way of a charge or mortgage shall be created in favour of the debenture trustee on- 9 [(i) any specific movable property of the company or its holding company or subsidiaries or associate companies or otherwise. ] (ii) any specific immovable property wherever situate, or any interest therein: Provided that in case of a non-banking financial company, the charge or mortgage under sub-clause (i) may be created on any movable property] 4 [Provided further that in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnation of the debenture trustee, the vacancy shall only be filled with the written consent of the majority of the debenture holders. (e) any debenture trustee may be removed from office before the expiry of his term only if it is approved by the holders of not less than three fourth in value of the debentures outstanding, at their meeting. (3) It shall be the duty of every debenture trustee to- (a) satisfy himself that the letter of offer does not contain any matter which is inconsistent with the terms of the issue of debentures or with the trust deed; (b) satisfy himself that the covenants in the trust deed are not prejudicial to the interest of the debenture holders; (c) call for periodical status or performance reports from the company; (d) communicate promptly to the debenture holders defaults, if any, with regard to payment of interest or redemption of debentures and action taken by the trustee therefor; (e) appoint a nominee director on the Board of the company in the event of- (i) two consecutive defaults in payment of interest to the debenture holders; or (ii) default in creation of security for debentures; or (iii) default in redemption of debentures. (f) ensure that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns given below:- (a) Debenture Redemption Reserve shall be created out of profits of the company available for payment of dividend; (b) the limits with respect to adequacy of Debenture Redemption Reserve and investment or deposits, as the case may be, shall be as under;- (i) Debenture Redemption Reserve is not required for debentures issued by All India Financial Institutions regulated by Reserve Bank of India and Banking Companies for both public as well as privately placed debentures; (ii) For other Financial Institutions within the meaning of clause (72) of section 2 of the Companies Act, 2013, Debenture Redemption Reserve shall be as applicable to Non -Banking Finance Companies registered with Reserve Bank of India. (iii) For listed companies (other than All India Financial Institutions and Banking Companies as specified in sub-clause (i)), Debenture Redemption Reserve is not required in the following cases - (A) in case of public issue of debentures A. for NBFCs registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934 and for Housing Finance Companies registered with National Housing Bank; B. for other listed companies; (B) in case of privately placed deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of debentures shall be open for inspection to any member or debenture holder of the company, in the same manner, to the same extent and on the payment of the same fees, as if it were the register of members of the company; and (b) A copy of the trust deed shall be forwarded to any member or debenture holder of the company, at his request, within seven days of the making thereof, on payment of fee. 6 [(9) Nothing contained in this rule shall apply to any amount received by a company against issue of commercial paper or any other similar instrument issued in accordance with the guidelines or regulations or notification issued by the Reserve Bank of India. (10) In case of any offer of foreign currency convertible bonds or foreign currency bonds issued in accordance with the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 or regulations or directions issued by the Reserve Bank of India, the provisions of this rule shall not apply unless otherwise provided in such Scheme or regulations or directions.] 12 [ (11) Nothing contained in this rule shall apply to rupee denominated bonds issued exclusively to overseas investors i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company shall create Debenture Redemption Reserve equivalent to at least fifty percent of the amount raised through the debenture issue before debenture redemption commences. (i) No DRR is required for debentures issued by All India Financial Institutions (AIFIs) regulated by Reserve Bank of India and Banking Companies for both public as well as privately placed debentures. For other Financial Institutions (FIs) within the meaning of clause (72) of section 2 of the Companies Act, 2013 , DRR will be as applicable to NBFCs registered with RBI. (ii) For NBFCs registered with the RBI under Section 45-IA of the RBI (Amendment) Act, 1997 2 [and for Housing Finance Companies registered with the National Housing Bank], the adequacy of DRR will be 25% 10 [ of the value of outstanding debentures ] issued through public issue as per present SEBI (Issue and Listing of Debt Securities) Regulations, 2008, and no DRR is required in the case of privately placed debentures. (iii) For other companies including manufacturing and infrastructure companies, the adequacy of DRR will be 25% 10 [ of the value of outstanding debentures ] issued through public issue as per present SEBI (Issue and Listing of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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